PM Lee at the 27th International Conference on the Future of Asia

Summary

The speaker emphasizes Asia's potential for growth, highlighted by a young and dynamic population, with China and India leading economic expansion. Japan and Southeast Asia also contribute significantly to the region's prosperity. However, geopolitical challenges, including Russia's invasion of Ukraine and US-China tensions, threaten stability. The speaker calls for collective security, economic cooperation, and a balanced regional architecture to ensure peace and shared prosperity, urging Asian nations to learn from Europe's strategic reassessment post-Ukraine and to foster an environment conducive to growth and cooperation.

Takeaways

• 🌏 **Asia's Potential**: Asia is a vibrant region with over half of the world's population, offering enormous potential for growth and development.
• 🇨🇳 **China's Economic Impact**: China is the world's second-largest economy, largest manufacturing economy, and fastest-growing consumer market.
• 🇮🇳 **India's Demographic Dividend**: India's young population is driving growth and represents a significant demographic dividend.
• 🌐 **Japan's Contribution**: Japan has been a key contributor to Asia's growth through foreign investments, technology transfers, and regional imports.
• 🌉 **Southeast Asia's Growth**: Southeast Asia, with a large, youthful population, is the 5th largest economy in the world and is growing steadily.
• 📉 **Global Predictions**: A pre-pandemic report predicted Asia to account for more than half of global GDP and drive 40% of the world's consumption by 2040.
• ⚔️ **Geopolitical Challenges**: The world is divided, and realizing Asia's potential is challenging due to geopolitical developments like Russia's attack on Ukraine and US-China tensions.
• 🏰 **European Lessons**: Asian countries should learn from Europe's experience, particularly regarding over-dependence on Russia for energy and the need for strategic reassessment.
• 🔒 **Regional Security**: Countries should strengthen collective security beyond alliances, engaging with potential adversaries to reduce mistrust and manage incidents.
• 💼 **Economic Cooperation**: Economic cooperation is essential for regional stability, and countries should avoid extreme measures that could precipitate conflict.
• 🌱 **ASEAN's Role**: ASEAN plays a significant role in regional architecture, fostering integration and interdependence through various forums and mechanisms.

Q & A

What is the significance of Asia's demographic characteristics for its economic potential?

Asia's population is not only the largest in the world but also predominantly young, full of energy and dynamism, which suggests a significant potential for economic growth and development.

How does China's economic status contribute to Asia's overall economic landscape?

China is the world's second-largest economy, the largest manufacturing economy and exporter of goods, and the fastest-growing consumer market, playing a pivotal role in driving Asia's economic growth.

What is the demographic dividend that India is expected to experience, and how will it impact its economy?

India is home to a fifth of the world's young population, which is expected to drive economic growth for many years due to the demographic dividend, as a large, youthful workforce can contribute to productivity and consumption.

What role has Japan played in Asia's growth, and how does it continue to contribute?

Japan has been a key contributor to Asia's growth through its foreign investments, technology transfers, and imports from the region, and it continues to play a significant role as a major advanced economy.

How does Southeast Asia's population and economic status contribute to the global economy?

With a population of 650 million, 60% of whom are below the age of 35, and a combined GDP of US$3 trillion, Southeast Asia is collectively the 5th largest economy in the world and is growing steadily, contributing significantly to the global economy.

What was the prediction made by McKinsey in 2019 regarding Asia's future economic contribution to the world?

McKinsey predicted in 2019 that Asia was on track to account for more than half of global GDP and to drive 40% of the world's consumption by 2040.

What are the two important geopolitical developments mentioned that pose challenges to Asia's potential?

The two geopolitical developments are Russia's attack on Ukraine, which poses a major threat to the global order, and the difficult relations between the US and China, which directly affect the Asia Pacific region.

How should Asian countries respond to the challenges posed by the divided world to ensure peace and stability?

Asian countries should learn from the European experience, avoid mis-steps that raise tensions, and work together to maintain peace and stability in the region, reducing the likelihood of conflicts.

What is the significance of the US-China rivalry for the Asia Pacific region, and what are the potential consequences?

The US-China rivalry is manifesting itself in Asia and could lead to further bifurcation of technology, splitting of supply chains, or even worse unintended consequences if relations continue on the current path.

How can countries in Asia work together to strengthen collective security and avoid an arms race?

Countries in Asia should work together to strengthen collective security beyond forming alliances and formal groupings, through engagement and confidence-building arrangements with potential adversaries.

What is the importance of economic cooperation in maintaining regional stability and security in Asia?

Economic cooperation is crucial as countries with stakes in each other's economic success have a greater incentive to work together, overcome problems, and maintain regional stability and security.

Outlines

00:00

🌏 Asia's Potential and Geopolitical Challenges

The speaker expresses delight in returning to Tokyo for the Nikkei Conference and highlights Asia's vibrant potential, with a large, youthful population. Asia is home to economic powerhouses like China and India, and Japan's contributions are noted. Southeast Asia's demographic and economic strengths are also acknowledged. The speaker references a pre-pandemic McKinsey report predicting Asia's significant global economic and consumption influence by 2040. However, the world's current division poses challenges, with Russia's attack on Ukraine threatening the global order and US-China relations affecting Asia. The speaker calls for learning from Europe's experience to maintain peace and stability in Asia.

05:07

🛡️ Regional Security and Collective Efforts for Peace

The speaker discusses the importance of regional security, suggesting that while countries will re-evaluate their defense strategies, collective security is crucial to avoid an arms race. The need for communication channels between potential adversaries, like during the Cold War, is emphasized. The speaker highlights the importance of managing flashpoints like the Korean Peninsula, Taiwan Strait, and the South China Sea. The involvement of external stakeholders, including the US, EU, and UK, is acknowledged as legitimate, and the aim should be a balanced power structure. The speaker advocates for a regional balance of power and influence to promote a stable environment.

10:09

💼 Economic Cooperation for Regional Stability

The speaker emphasizes the need for economic cooperation alongside security considerations, warning against extreme measures that could lead to division and conflict. The speaker discusses the US's economic ties with Asia and the significance of the CPTPP and the newly launched IPEF. China's economic influence and initiatives like the Belt and Road Initiative are noted as positive for regional integration. The speaker calls for an open and inclusive regional architecture, where the US and China can accommodate each other's interests and responsibilities, fostering a peaceful coexistence.

15:10

🌐 The Role of ASEAN and Japan in Regional Integration

The speaker highlights ASEAN's significant role in fostering regional integration and the support for ASEAN Centrality in regional affairs. The speaker mentions various ASEAN-Plus platforms and the RCEP as examples of fostering interdependence. Japan's role as an investor and advocate for trade liberalization is acknowledged, with a call for Japan to address historical issues for greater security cooperation. The speaker concludes by emphasizing the importance of continued cooperation, mutual trust, and conflict resolution to maintain growth and development in Asia, with a warning that peace should not be taken for granted.

Keywords

💡Asia's potential

Asia's potential refers to the untapped economic and social growth that the continent can achieve due to its large, youthful population and vibrant region. The script highlights Asia's promise by mentioning its demographic advantages and the potential for economic takeoff, as exemplified by the growing economies of China and India.

💡Geopolitical developments

Geopolitical developments are significant political events or changes that have an impact on international relations and the balance of power. The script discusses two key developments: Russia's attack on Ukraine and the tense relations between the US and China, both of which pose challenges to the global order and Asia's stability.

💡Demographic dividend

The demographic dividend is the economic growth potential that arises when a country has a large, working-age population. The script mentions India's young population as a demographic dividend that will drive growth for many years, emphasizing the importance of a youthful population in economic development.

💡Global order

The global order refers to the established system of international norms, rules, and institutions that govern relations among countries. The script describes Russia's attack on Ukraine as a threat to the global order, indicating a violation of the UN Charter and international law that disrupts the international system.

💡US-China relations

US-China relations refer to the diplomatic, economic, and political ties between the United States and China. The script notes the increasing tension in these relations and their direct impact on the Asia Pacific region, highlighting the rivalry's potential to cause a bifurcation of technology and supply chains.

💡Collective security

Collective security is a mutual agreement among countries to provide for their common defense through collective action. The script suggests that countries must work together to strengthen collective security beyond forming alliances, to maintain peace and stability in the region.

💡Flashpoints

Flashpoints are areas or issues that have the potential to ignite conflict or war. The script identifies several flashpoints in Asia, such as the Korean Peninsula, the Taiwan Strait, and the South China Sea, emphasizing the need for careful diplomacy to prevent escalation.

💡Economic cooperation

Economic cooperation refers to the collaborative efforts among countries to achieve mutual economic benefits. The script discusses the importance of economic cooperation alongside security cooperation, noting that countries with economic stakes in each other are more likely to work together and resolve disputes.

💡ASEAN Centrality

ASEAN Centrality is the principle that the Association of Southeast Asian Nations (ASEAN) should be at the heart of regional cooperation and decision-making. The script mentions ASEAN Centrality as a significant aspect of the regional architecture, with various platforms fostering regional integration and interdependence.

💡Indo-Pacific Economic Framework (IPEF)

The Indo-Pacific Economic Framework (IPEF) is a proposed economic partnership aimed at promoting collaboration on trade, supply chains, clean energy, and other issues in the Indo-Pacific region. The script discusses the IPEF as a recent initiative by the US to engage economically with Asian partners, although it does not include trade liberalization.

💡Belt and Road Initiative (BRI)

The Belt and Road Initiative (BRI) is a development strategy proposed by China that focuses on infrastructure development and investments in over 150 countries. The script references the BRI as one of China's broad initiatives to develop regional and multilateral links, which has been welcomed by many countries in the region.

Highlights

Asia is a vibrant region with enormous promise, home to more than half of the world's population.

China is the world's second-largest economy, largest manufacturing economy, and exporter of goods.

India is one of the fastest-growing economies with a significant young population.

Japan has been a key contributor to Asia's growth through foreign investments and technology transfers.

Southeast Asia, with a population of 650 million, has a combined GDP making it the 5th largest economy in the world.

Asia is predicted to account for more than half of global GDP and drive 40% of the world's consumption by 2040.

The world is divided, and realizing Asia's potential in this divided world will be challenging.

Russia's attack on Ukraine poses a major threat to the global order and international law.

US-China relations are increasingly tense, affecting the Asia Pacific region and potentially leading to bifurcation of technology and supply chains.

Asian countries should learn from the European experience and work to maintain peace and stability in the region.

Countries must strengthen their collective security beyond forming alliances and engage with potential adversaries.

The handling of potential flashpoints like the Korean Peninsula, Taiwan Strait, and South China Sea requires deft diplomacy and political judgement.

Many stakeholders, including those from outside Asia, have legitimate interests in maintaining a secure and stable region.

Economic cooperation is crucial for countries to have stakes in each other's success and overcome problems.

The US and China should demonstrate that their engagement in Asia is for mutual benefit and not just for power projection.

China's economic influence in Asia is large and growing, and its integration into the region is beneficial.

ASEAN plays a significant role in regional architecture, fostering regional integration and interdependence.

Japan has a major role to play in regional affairs, being a leading investor and advocate for regional trade liberalisation.

Asian countries must continue to strive for cooperation, mutual trust, and conflict resolution to maintain growth and development.

Transcripts

Your Excellencies

Distinguished Guests, ladies and gentlemen

I am delighted to be back here in Tokyo, and to address the Nikkei Conference again.

Asia is a vibrant region with enormous promise.

More than half of the world’s population live in Asia.

The population is growing.

The bulk are young, full of energy and dynamism.

So there is much potential for Asia to take off.

China is the world’s second largest economy.

Also the largest manufacturing economy and exporter of goods,

and the fastest growing consumer market.

India is one of the fastest growing economies in the world.

Home to a fifth of the world’s young population,

a demographic dividend that will drive growth for many years.

Japan is a major advanced economy which has been a key contributor to Asia’s growth,

through its foreign investments, its technology transfers and its imports from the region.

Southeast Asia too, with a population of 650 million –

of whom, 60% are below the age of 35.

Southeast Asia’s combined GDP of US$3 trillion makes it collectively the 5th largest economy in the world,

and one that is growing steadily.

Before the pandemic, McKinsey published a report in 2019 that predicted that Asia was on track

to account for more than half of global GDP and to drive 40% of the world’s consumption by 2040.

So there is much that Asia can look forward to.

However, as the theme of this year’s conference suggests The world is divided.

And realising Asia’s promise and potential in this divided world will be challenging.

Let me mention two important geopolitical developments.

First, Russia’s attack on Ukraine poses  a major threat to the global order.

It contravenes the UN Charter and is a clear and gross violation of international law.

It has upended the rules-based international system that all countries operate within and depend on.

It also sets a dangerous precedent that jeopardises the security and existence of many countries,

especially of small states like Singapore.

Second, difficult relations between the US and China will directly affect the Asia Pacific region.

These relations have grown increasingly tense in the last few years,

and the rivalry is manifesting itself in Asia.

If US-China relations continue on this path,

it will lead to further bifurcation of technology

and splitting of supply chains, or even worse unintended consequences

How should Asian countries respond to these challenges,

to keep the regional environment secure and stable,

and enable all countries to grow and prosper peacefully and take their places in the sun?

We have to study and learn from the European experience.

And work hard to avoid the mis-steps and interactions which raised tensions and preceded the war in Ukraine.

In the aftermath of Ukraine, European countries are now rethinking their strategic choices.

They are regretting their over dependence on Russia for energy

and are urgently taking steps to stop importing oil and gas from Russia as soon as possible,

even if it means paying more for alternative supplies.

Many of them are strengthening their defence postures.

Including Germany, which is sharply increasing defence spending to over 2% of GDP.

Meanwhile, Sweden and Finland, which have long been neutral countries,

have applied to join NATO to protect themselves from Russia.

It is completely understandable why ex-post, after Russia invaded Ukraine, the Europeans are making these moves.

We hope that these moves will result in a more secure and stable Europe,

although their long-term consequences are hard to foresee.

Russia too will have to re-examine its strategic situation and goals

and the relationship it would like to have with its European neighbours and the rest of the world.

But in Asia, countries should be thinking not just of how to be better prepared should conflict unfortunately occur,

but how to work together ex-ante before trouble happens,

to maintain peace and stability in the region

and reduce the likelihood of a conflict in the first place.

We should maximise the opportunities for countries to work and prosper together

and minimise the risk of tensions worsening into hostilities.

How can we do this?

First, on regional security.

Individual countries will naturally re-examine their defence strategies and spending.

And each will surely consider the need to strengthen its own defence capabilities to protect itself.

In Japan and South Korea, sensitive issues are being raised publicly.

Including whether to allow nuclear weapons to be deployed on their soil

or even go a step further and build capabilities to develop such weapons.

But if we only look at regional security from the perspectives of individual national perspectives,

we may end up with an arms race, and an unstable outcome

Countries must therefore also work together to strengthen their collective security.

And they must do this beyond forming  alliances and formal groupings of like-minded partners,

like the Quad or the AUKUS group.

But also through engagement and confidence and trust building arrangements with potential adversaries.

Even at the height of the Cold War, there were quiet channels of communication between the US and Soviet Union,

at the top leadership level and between the armed forces.

Such channels need to be worked out and established between the US and China,

and between other countries in Asia which have disputes with each other.

They help to reduce mistrust, clarify misunderstandings and manage acute incidents,

which are bound to arise from time to time.

In particular, countries must be very mindful, and cautious,

in handling potential flashpoints that can trigger conflict.

For example, on the Korean Peninsula the Taiwan Strait, the Senkaku or Diaoyu Islands, or the South China Sea.

Preventing these complex issues from taking an untoward turn is far from straightforward

because the parties involved not only have to consider strategic implications,

but also respond to domestic political pressures.

Therefore, it will require deft diplomacy, political judgement and statesmanship of the highest order.

But the stakes are high, and countries must be willing to show restraint, accept differences and live with compromises.

Because if these flashpoints are mishandled,

a miscalculation or mishap could well trigger an escalation and serious consequences.

As for which parties should be involved in regional security

we must accept that many stakeholders will be involved, including some from outside of Asia

They too have legitimate interests in Asia.

Interest in maintaining a secure, stable region.

Interest in keeping the region open for  business with all parts of the world.

Interest in accessing sea lanes of communications in Asia vital to global shipping and commerce.

The US has provided the framework for peace and stability for the region since end of the second world war.

Even as the strategic balance shifts the US still retains this essential role,

which no other country can take over.

Australia, the European Union, and the UK also have strong security ties with Asia, and interests in the region.

It is neither realistic nor wise to exclude these participants.

Instead, our aim should be to achieve a regional balance of power and influence among all stakeholders.

Not only among the Asian countries themselves, but also with others, such as the US, EU and UK

so that we can promote a more stable  and secure environment in the region.

At the same time, regional engagement within Asia and with the rest of world

cannot just be based on security considerations and relations.

Security cooperation must also be complemented by tangible and mutually beneficial economic cooperation

because countries with stakes in one another’s economic success

have greater incentive to work together and to overcome problems between them.

In response to geopolitical tensions, countries have increasingly emphasised resilience

and national security considerations over the economic gains from free trade and investment flows. 

But they should be very careful about taking extreme measures, pre-emptively before conflicts arise.

Whether to disconnect themselves from global supply chains and strive for reshoring

or to go for “friend-shoring” and to cut off countries that are not allies or friends.

Such actions shut off avenues for regional growth and cooperation,

deepen divisions between countries

and may precipitate the very conflicts that we all hope to avoid.

In particular, for major powers like the US and China, economic cooperation with Asian countries

demonstrates convincingly that their engagement is not just to enhance their own power and reach in the region,

but also to yield tangible, win-win benefits to their partners.

The US has extensive economic ties with Asia, including substantial trade and investments.

President Obama pursued the Trans Pacific Partnership (TPP).

This was a high-quality free trade agreement offering enhanced market access to the US.

Its participants spanned both sides of the Pacific, including developing as well as developed countries.

Unfortunately, under the Trump Administration, the US ultimately walked away from the TPP

prompted by domestic political considerations.

But the remaining 11 members came together to conclude the CPTPP, thanks to Japan’s leadership.

Under the Biden Administration

the US has not re-joined the CPTPP.

Instead, President Biden has promoted the Indo-Pacific Economic Framework (IPEF).

It was launched just this week here in Tokyo.

Japan and Singapore are among the 13 countries participating in the Indo-Pacific Economic Framework.

The IPEF promotes flexible collaboration on four sets of issues: 

Trade; Supply chains; Clean energy, decarbonisation and infrastructure; Tax and anti-corruption.

This forward-looking agenda also covers the digital and green economies,

themes that will resonate well in the region.

However, the IPEF does not include trade liberalisation or market access.

It is not a free trade agreement and therefore not a substitute for the TPP.

But it demonstrates that the Biden Administration values its partners in Asia,

and appreciates the importance of engaging them through economic diplomacy.

We hope the IPEF will lead on to a Free Trade Agreement,

including the US and its Asian partners one day, when US politics allows.

Meanwhile, China’s economic influence in Asia is large and growing. 

This is a natural and positive consequence of China’s continuing growth and development.

It has benefited the region immensely.

In fact, China is already the largest trading partner for almost every country in the region, including Singapore and Japan.

It is far better that China’s economy be  integrated into the region,

than for it to operate on its own, by a different set of rules.

China has launched broad initiatives,

such as the Belt and Road Initiative (BRI) and the Global Development Initiative (GDI),

to systematically develop its regional and multilateral links.

Many countries have welcomed these positive initiatives, including Singapore,

which supports the Belt and Road Initiative

and has joined the Group of Friends of the Global Development Initiative.

We look forward to China engaging its partners through these initiatives

in a constructive and mutually beneficial manner, in order to foster a conducive, open region

where countries can continue to grow their economic ties with each other, and with the rest of the world

The various security arrangements and economic engagements need to fit together

to form an open and inclusive regional architecture.

A lot will depend on how relations between the US and China develop.

Whether the US and others are able to accommodate China’s growing influence and legitimate interests.

How China accepts its increasing responsibilities as a global player

and demonstrates its benign objectives in the region.

And also how the two can jointly realise their mutual longer-term interests in Asia

to build a region that is open and stable,

one where countries big and small can coexist side by side, manage their differences,

compete and cooperate peacefully together.

The US-China rivalry is inevitably  affecting all countries in Asia.

It is natural for some countries to  be closer to one side or the other.

But most countries would prefer not to  be forced to choose between the US and China.

There will be no good outcome if Asian countries are split between two camps,

each siding with one or the other.

A more stable and less tense configuration is for the two powers to have overlapping circles of friends,

and countries find it possible to have friends on both sides.

Security and economic schemes in Asia should conduce towards this outcome.

ASEAN plays a significant role in this  regional architecture.

We welcome the broad international support for ASEAN and ASEAN Centrality in regional affairs.

Amongst others, the Quad countries and South Korea have issued Leaders-level statements

reaffirming the objectives and principles of the ASEAN Outlook on the Indo-Pacific.

Prime Minister Kishida of Japan has emphasised that it is in ASEAN and Japan’s common interest

to have an Indo-Pacific region with “ASEAN at its centre” that is “peaceful and stable”.

ASEAN Centrality is not just a concept,

but has led to significant forums and mechanisms to foster regional integration and interdependence.

For example, the various ASEAN-Plus platforms, including the ASEAN Regional Forum

and the ASEAN Defence Ministers Meeting Plus,

which offer countries neutral venues for dialogue and engagement.

Another important initiative is the RCEP, the Regional Comprehensive Economic Partnership.

The RCEP is a FTA with an open and inclusive framework.

China is a member, so are Japan South Korea, Australia and New Zealand,

all of which have close security and economic ties with the US.

And of course, there is ASEAN, which initiated the idea and brought everybody together.

Given its influence and resources, Japan has a major role to play in regional affairs.

Japan is a leading investor in Asia, and a strong advocate for regional trade liberalisation.

However, in the security realm, the history of the Pacific War has led Japan to adopt a low-key posture.

With the passing of the years and generations and in a new strategic environment,

Japan should consider how it can come to terms with the past

and put to rest these long outstanding historical issues.

This will enable it to make a greater  contribution to regional security cooperation

and to participate in building and upholding an open and inclusive regional architecture.

For the last few decades, Asia has been fortunate to enjoy a stable and secure environment.

This stability has been critical to the region’s dynamism and prosperity

We hope that the decades ahead will see peace prevailing, and economic progress continuing in Asia.

But we cannot assume that this happy state of affairs will persist

As Europe’s experience shows, things can go wrong, and conflict can break out.

And war in Asia is a scenario we cannot rule out.

Therefore, Asian countries must continue to strive to deepen cooperation between ourselves,

foster mutual trust and work out our differences.

This is essential to maximise our chances of maintaining the positive momentum of growth and development

and realising the promise of a peaceful and vibrant Asia in the 21st century.

Thank you very much!